Stocks Rebound As Interest Rate Jitters Fade

Federal Reserve Chairman Alan Greenspan took a more soothing tone Wednesday, easing the past week’s inflation and interest rate jitters to spur an afternoon rally in the stock market.

The Dow Jones industrial average rose 93.13 points to close at 6,945.85, moving back within striking distance of 7,000.

Broader stock measures also rallied as the bond market snapped its recent slump, halting a worrisome climb in interest rates.

With no major economic reports to elaborate on the inflation outlook, investors spent much of the session awaiting Wednesday afternoon’s appearance by Greenspan before the House Banking Committee.

Although he reiterated his readiness to raise the Fed’s key lending rates to keep a lid on inflation, Greenspan’s remarks were seen as less strident than last week’s report to the Senate Banking Committee, in which he warned that unrelenting investor optimism poses an inflationary risk.

Greenspan “put his comments that roiled the markets last week into a proper context,” said Joe Battipaglia, chief investment strategist at Gruntal & Co. “He was telling everyone not to jump to conclusions” that a Fed rate hike is all but certain at March 25’s policy meeting.

Advancing issues outnumbered decliners by more than a 5-to-3 margin on the New York Stock Exchange, where volume totaled 528.81 million shares as of 4 p.m., slightly shy of Tuesday’s tally.

Some of the stocks that moved substantially or traded heavily Wednesday:

NYSE

Kmart, up 1/8 at 13.

The discount retailer narrowed its fourth-quarter loss as it continued to cut costs. The loss of $164 million, or 27 cents a share, was in line with Wall Street’s expectations.

NASDAQ

Corporate Express, down 8-3/16 at 10-1/8.

The office-products supplier said its full-year profits will be below analyst expectations. Corporate Express blamed weakness in its same-day delivery business.

Broderbund Software, down 7-3/8 at 23-1/8.

The software maker said fierce competition will cause it to trail Wall Street’s second-quarter earnings expectations. Broderbund, which makes the the multimedia computer games Myst and Carmen Sandiego, said late Tuesday its unit volume sales rose better than 30 percent during the Christmas season. But those gains were undercut by heavy price cutting.

Qiagen, up 3-3/4 at 30-5/8.

The Dutch biotechnology concern reported a fourth-quarter profit of about $1.9 million, or 11 cents a share, more than doubling its results in the same period a year earlier. Sales rose nearly 50 percent to about $15 million.